PIRA Energy oil market recap: Week ending 27 April 2014

PIRA Energy Group analysis of oil market fundamentals for the week ending 27 April has revealed the following:

USA

• Commercial oil inventories increased for the week ending 18 April.
• The rate of inventory in April so far is historic. It will substantially moderate for the rest of the month, but will still be a large increase.
• Propane stock building is increased, even as exports are sustained at high levels.
• Ethane usage is affected by cracker downtime, but is anticipated to increase over the next couple of months.

Ethanol

• Ethanol prices dropped to the lowest level in over four weeks on 16 April as production rose to the highest level of the year. Values were significantly below gasoline again, after selling at a premium just two weeks ago.
• Ethanol production fell to 910 million bpd during the week ending 18 April, down from an 18 week high of 939 million bpd in the preceding week. Despite the decline, this was the highest output so far this year as weathr improved and logistical problems eased.

Freight

Freight rates keep increasing leading to weakening arb margins while some cargoes are being redirected to shorter haul routes, as the emphasis shifts to more efficient operations.

Japan

• Total commercial stocks drew due to a draw on crude.
• Finished product stocks were moderately tighter.
• Demand impairment continues due to the 1 April consumption tax increase however, this impact has lessened over the past week with slightly higher gasoline and gasoil demands.
• The indicative refining margin was moderately higher and margins remain good.

Nigeria

Risks in Nigerian crude supply are increasing in both the near and long term, according to PIRA Energy. In the near term, oil infrastructure sabotage may increase ahead of the February 2015 elections, adding to already existing oil theft and pipeline vandalism. In the longer term, growth remains challenged. Continued insecurity has led foreign oil companies to exit from vulnerable areas, and a highly uncertain regulatory climate due to the delayed Petroleum Industry Bill has stalled investment.

Adapted from a press release by Emma McAleavey.

Read the article online at: https://www.hydrocarbonengineering.com/gas-processing/29042014/pira_energy_437/